Hi Karenarran & everyone else,
In my case, I was using a card that had no funds/money available on it at the time I was trying to verify card details - even though I was downloading and updating free apps, to do so Apple places a hold on 1 €/$ when verifying your card details. They dont actually take the money its basically to verify that funds are available on the card.
Once I used a card with funds available it worked straight away for me. Might be a different problem for you but that solved it for me so hope that helps.
While trying to update apps through the App Store on my iPhone I too kept getting the dreaded "incorrect security code" error, although the code I was entering was correct!? This was the solution for me-
Go to iTunes on your computer
Click on Store / at top left of page
Click on Account / top right of page
Click on "Change 1-Click Settings"
Type in your cc security code here...
No clue why 1-Click Settings is somehow separate from Account Settings... But doing this did correct my problem.
It's not just the cc sec code; enter paypal, credit card or bank info, iTunes is not recognizing these forms as valid methods of payment. I hate the fact that Apple hasn't yet decided to create a call center for iTunes as opposed to having us emailing....and wait....for a reply.... especially when there are SO many iTunes issues SO many of us encounter.
I don't know how/why that would work, but I'll try later today @justausername